Sell

After the formation of new state government in Andhra Pradesh, the government has announced cancellation of some infra projects sanctioned by previous government prior to April 1, 2019. As per government, It is noted that a number of engineering works were...

EBITDA was down by 56% while the margin down by 1400bps on account of lower realisation in the US and inventory write-offs. Weak filing momentum as categorized by ~5 filings in FY19 with the major one being Imbruvica ($2.97 billion sale in FY19) Key drivers of revenue in FY20 will be India, Brazil and Canada which together is expected to see high growth in FY20-21E. We revise downward our revenue estimates by 14%/11% for FY20/21E while the PAT estimate by 13% in FY20 and 6% in FY21...

We lower our earning estimates by 11% & 8% for FY20E & FY21E to factor in near impact on earnings. Despite this, we expect earnings to grow by 23% CAGR over FY19-21E. We roll forward to FY21E and value HAVL at 36x (historical average) given its high brand recall, strong retail presence and strong balance...

Mahindra & Mahindra (MM) clocked a 6% YoY rise in Q4FY19 standalone revenue to Rs 140bn, with realisations up 6% despite stagnant volume growth. EBITDA declined 6% YoY to Rs 16.5bn but came in above our estimate, as did margins at 11.7%. Adj. PAT was broadly in line, dipping 9% YoY to Rs 9.3bn. We trim FY20/FY21 earnings estimates by ~2% each to build in softer volumes and also pare our target core P/E multiple from 14x to 12x. Upon rollover to Mar'20, our TP remains at Rs 760....

We attended Hero MotoCorp's (HMCL) analyst meet where management reiterated its dual focus of making inroads into the premium segment and retaining its hold on the deluxe segment. While acknowledging immediate concerns from higher insurance costs, new ABS/CBS norms and cramped liquidity, HMCL believes India's macro climate is favourable. Management also remains optimistic on exports and expansion into newer markets. Macro climate favouring long-term industry growth: HMCL is optimistic on growth prospects of the 2W industry in the mid-to-long term, underpinned by...

US beat drives in-line Q4; guidance less impressive Q4FY19 EBITDA of Rs 8.9bn has multiple moving parts: (1) US$ 60mn-65mn bump up in US business, (2) one-time sales impact of Rs 11bn from AML transition in India business, and (3) Rs 500mn forex loss. Adjusted for these, EBITDA is in line. FY20 sales growth guidance in low double-digits to midteens, near-term margin pressure with rising specialty spends, and continued price pressure in US generics can trigger consensus EPS downgrades. We further...

While our thesis of margin contraction is playing out, we remain generous with a ~13% rev CAGR and margins largely flat at 38% in our estimates. These result in 16% earnings CAGR. ROEs are at ~20%. DIVI is trading at 31/27x FY20/21E EPS, a ~50% premium to peer-avg and ~40% above historical avg, much of which corresponds to periods of 40% plus return ratios. Even so, valuations have rarely crossed 25x one-year forward P/E. With return ratios in a significantly lower range, current valuations look unsustainable. Maintain SELL with a TP of Rs 1,445 (22x FY21E EPS). DIVI may be a good business, but the price is clearly wrong. We maintain SELL on DIVI, following a significant drop in profitability. Our thesis is playing out, even as our estimates remain unchanged. At 22x FY21E EPS, our TP stays at Rs 1,445/sh (more than 15% downside).

Margins impacted, Premium valuations: Divis Labs Net revenues increased by 15.5% YoY to Rs 12.6 bn, which is inlinewith our estimates for the quarter.

Premier Q4 Results Mixed: Premier Explosives (PEL) Q4 earnings were higher than our estimates for the quarter at Rs.2.62 (Vs. Est 2.43) on the back of improved EBITDA margin of 8.6% in Q4 (158 bps) and tax write backs (Rs. 77 Mn) despite ~ 30% fall in revenue (Rs. 586 Mn) booked during Q4.

HEG reported a steady Q4FY19 performance wherein the topline came in marginally lower than our estimates while EBITDA and PAT came in higher than our estimate. The company reported a capacity utilisation of ~80% (lower than our estimate of 85% in Q4FY19, 84% in Q4FY18 and 82% in Q3FY19). HEG reported a topline of | 1346.7 crore (down 27.8% QoQ, up 4.2% YoY, marginally lower than our estimate: | 1393.6 crore). EBITDA for the quarter was at | 788 crore (higher than our estimate of | 695.7 crore). EBITDA margin was at 58.5% (higher than our estimate of 49.9% in Q4FY19,...